Behind the Scenes: The Corporate Governance Preferences of Institutional Investors. (December 2016)

• Record Type: Journal Article
• Authors: McCAHERY, JOSEPH A.; SAUTNER, ZACHARIAS; STARKS, LAURA T.
• Is Part Of: Journal of finance. Volume 71:Number 6(2016:Dec.)
• Page Start: 2905
• Page End: 2932
• Publication Date: 2016-12
• Subjects: Finance -- Periodicals; Finance -- United States -- Periodicals; 332.05
• DOI: 10.1111/jofi.12393
• Languages: English
• ISSNs: 0022-1082

Abstract

ABSTRACT: We survey institutional investors to better understand their role in the corporate governance of firms. Consistent with a number of theories, we document widespread behind‐the‐scenes intervention as well as governance‐motivated exit. These governance mechanisms are viewed as complementary devices, with intervention typically occurring prior to a potential exit. We further find that long‐term investors and investors that are less concerned about stock liquidity intervene more intensively. Finally, we find that most investors use proxy advisors and believe that the information provided by such advisors improves their own voting decisions.